Regulatory and Legal Affairs

💸 Sen. Ted Cruz and others introduced the “No Tax on Tips Act,” exempting cash tips from federal income tax starting in 2025. President Trump, at the Republican National Convention in Milwaukee, endorsed the act, citing a Nevada server's complaint about tax on tips. This act could impact restaurant industry employees, as tips comprise 71% of their minimum wage. Critics argue that about half of tipped workers don't earn enough to pay federal income taxes, and the act doesn't exempt employer payroll taxes or state taxes on tips.

📌 The National Labor Relations Board (NLRB) withdrew its appeal of a federal judge's ruling against the broadened joint employer rule in May. The rule, expanded last fall and struck down by multiple government branches, could have held franchisees and franchisors equally liable for labor terms. The NLRB still supports the legality of the rule despite the blocked appeal, which leaves the possibility of a future challenge open.

🏨 New York City Council introduced a bill on July 18 that could lead to thousands of job losses and hotel closures, affecting the city's nearly 700 hotels and economy. The bill mandates operational changes and would ban non-union hotels from using subcontractors for core functions, pushing towards mandatory unionization. The American Hotel & Lodging Association criticized the policy for its one-size-fits-all approach and lack of hotelier input, urging a more considered review.

🚧 Announced on July 17, the UK Government's new Employment Rights Bill, to be introduced within the first 100 days of the new parliament, will ban zero-hour contracts and 'fire and rehire' practices, while ensuring workers receive contracts reflecting regular working hours. All workers to have 'reasonable notice' of shift changes with compensation for cancelled shifts. The bill also mandates sick pay, parental leave, and protection from unfair dismissal from day one, abolishing the lower earnings limit on Statutory Sick Pay and its three-day waiting period. Further protections for new mothers include unlawful dismissal prevention for six months post-return to work, and a 'genuine living wage' is planned. Additionally, the bill will streamline union recognition and access. Concurrently, reforms to the Apprenticeship Levy and improvements to the planning system aim to boost hospitality sector growth.

📌 AHLA secured a policy victory last month in Hawaii, a key U.S. tourist destination, to ensure fair treatment for hotels. The new law SB 2919, enacted in May, allows local officials to regulate short-term rentals like hotels and potentially phase them out. This came after wildfires in Maui last summer destroyed over 2,200 structures with damages exceeding $5 billion. The law had broad support, including from Hawai‘i Hotel Alliance and two labor unions. AHLA continues to oppose state-level policies favoring short-term rentals, achieving victories in Georgia, Kentucky, Nebraska, Tennessee, and Utah against various proposals and taxes that could have disadvantaged hotels.